THIS IS NOT ->Delawareliberal

Tuesday, June 27, 2006

China's Central Bank: Countries should rely less on dollar

Years from now, when your grandchild asks, "When did the United States become a second rate power?" you can relply, "It started when Bush was elected, but it became official on June 27, 2006"

BEIJING (Reuters) - Countries around the world should gradually rely less on the dollar for trade and their foreign exchange reserves, a Chinese central bank official said in comments that pushed the dollar down against the yen.

Analysts say China has been gradually diversifying away from dollar assets in its foreign exchange reserves, the world's largest, but fears of a collapse in the U.S. currency will prevent it from making any dramatic shift.

"Internationally speaking, the situation of over-reliance on a certain country's currency for international trade, settlements and reserve assets should be gradually changed," Wu Xiaoling, deputy governor of the People's Bank of China, said in remarks reported by the official Financial News on Tuesday.

Um...what? This makes no sense. The Chinese are attempting to diversify their holdings as a hedge against flucuations. The Chinese hold a great deal of currency as well as bonds. So much so that they're inextricably linked to us.

The US dollar isn't in danger of collapsing. That the dollar is showing downward pressure isn't necessarily a bad thing either. It makes our exports cheaper.

I don't know who has been catching Al Mascitti's show but Gary (the oil market player) has been making alot of sense on the SEC's l;ack of hedge fund oversight and the heavy influence these billionaire players have been having on the dollar, oil, etc.Gary correlates the war on terror with the market players in a new and firghtening way.